Citigroup announced it had recently discovered fraudulent activities in its Mexico banking unit, forcing the bank to adjust its fourth-quarter and 2013 results. During its investigation of the alleged $400 million fraud, the company noticed some oddities from one employee, according to sources. Shayndi Raice and Laurence Iliff were first to report that a Citigroup employee was being questioned by the Mexican police for the alleged theft.

Mexican police questioned a Citigroup Inc. employee suspected of participating in the alleged theft of $400 million from the bank, according to a person familiar with the matter.

The employee, described by the person familiar with the matter as junior at the company, worked for the bank’s Mexico unit, Banco Nacional de Mexico, or Banamex.

The employee isn’t currently in police custody, the person added. It is unclear whether the person is still working for Citigroup or when the questioning occurred.

The questioning of a Citigroup unit employee in Mexico is the latest step in what has already been an intense investigation for the third largest bank in the U.S. by assets.

On Feb. 11, Citigroup learned that a lending client, Mexican oil-services company Oceanografia SA de CV, had been suspended from being awarded new Mexican government contracts, according to a statement released by the bank Friday. That spurred the bank to begin its own investigation into its dealings with the company. The bank learned on Feb. 20 that Oceanografia had allegedly submitted nearly $400 million of fraudulent invoices for short-term credit from Citigroup, which were processed by a bank employee, according to the statement and an internal company memo reviewed by The Wall Street Journal.

The invoices were submitted to finance money that was owed by Mexican state-owned oil company Petróleos Mexicanos, or Pemex.

Oceanografia is a key supplier to Pemex. Under the agreement between the contractor and the bank, Oceanografia transferred its accounts receivables to Banamex in exchange for cash. That way, Pemex would essentially pay Banamex as the contracts were fulfilled.

The bank had extended a total of $585 million in short term credit to Oceanografia as of the end of the 2013. The bank Friday said it was forced to revise its fourth-quarter and full-year results by about $235 million after-tax as a result of the alleged fraud.

The person familiar with the matter said the bank notified Mexican police when it suspected the money had been stolen. The bank noticed “oddities” coming from one of its own employees, said the person, who declined to elaborate.

The person added that bank officials are looking into the possibility that there may be more than one Banamex employee involved in the alleged fraud, since the person they’ve focused on is relatively low in the organization and the nature of the alleged fraud was complex. The bank is also speaking with former Banamex employees who may know something about the alleged fraud, the person said.

Mexico Attorney General Jesus Murillo Karam said Friday that the government had seized control of Oceanografía in order to preserve records and maintain operations as officials investigated the alleged fraud. He said that a preliminary investigation found “inconsistencies in documentation,” but that no arrests had been made.

Pemex said it has no information on details of the investigation, but is cooperating. A representative of Oceanografía didn’t respond to requests for comment Friday.

Citigroup’s Banamex unit has been working with Mexico’s attorney general to bring any responsible parties for the loss to justice. “I can assure you there will be accountability for those who perpetrated this despicable crime and any employee who enabled it, either through lax supervision, circumvention of our controls, or violating our Code of Conduct,” Citigroup Chief Executive Michael Corbat said in a statement Friday.

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